Market Structure

Market Structure is the pattern of swing highs and swing lows that defines market state. An uptrend consists of sequentially higher highs and higher lows; a downtrend consists of sequentially lower highs and lower lows; a range consists of overlapping highs and lows within defined boundaries. Market Structure is the foundation concept for nearly all price-action-based methodologies, SMC, ICT, Wyckoff, and classical technical analysis all build on it.

Reading structure correctly requires timeframe discipline: a market can be in a Daily uptrend but an hourly downtrend simultaneously. Traders typically establish context on the higher timeframe (4H or Daily) and take entries on a lower timeframe (5m or 15m) aligned with that higher-timeframe bias. Structure changes through two events, Break of Structure (BOS) continues the existing trend, Change of Character (CHOCH) signals a potential reversal. Ranging structure is identified by failure to make new highs or new lows. The hardest conditions for most strategies.